If you think the ever-worsening real estate market is living on a prayer, you’re exactly right. A prayer… AND a well-positioned armchair, that is.
On this, the lead story of an August 24 Dow Jones MarketWatch explains: “With prices falling in many areas and inventories of homes for sale growing, some sellers have resorted to desperate measures to close a deal.” Namely, the power of St. Joseph and the ancient art of Feng Shui.
The first method is a breeze. Simply bury a pocket-sized statuette of St. Joseph (patron saint of home sales) upside down in the ground, and... wait. The second approach is a little more complicated, as it involves the karmic redistribution of certain energy fields, conscious and unconscious.
Both are rapidly becoming, well, household names among the growing mass of sellers willing to try anything to get an offer. To wit: According to one online retailer of the $9.95 St. Joseph burial kit, sales have risen over 100% every year since 2004.
Likewise, the call for professional “Feng Shui Stagers,” those who come into your house and rearrange furniture in order to open the positive flow of energy, is off the hook.
Talk about repeating one’s mistakes. Think about it: When the U.S. housing market was going gangbusters in early 2005, the public believed the five-year-long boom would continue based only upon: Faith.
At the time, household debt was rising well above household income, homebuilders were breaking ground for properties not in demand, home prices were soaring above their actual value, home equity loans were being issued at a record pace, and by year-end 2005, interest-only and hybrid-adjustable-rate mortgages made up 42% of home financing (vs. 1.9% in 2001).
Once that hope started to fade, no amount of faith could prevent the U.S. real estate market from crashing. Bob Prechter foresaw this in his 2002 bestseller, Conquer The Crash. Taken from CTC are the following excerpts:
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“Financial values can disappear into nowhere. The idea that [a bond certificate] had a certain value was in the head [of the bond holder] and the heads of others who agreed. When the point of agreement changed, so did the value.”
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“What screams ‘bubble’ – giant, historic bubble – in real estate is the system-wide extension of massive amounts of credit to finance property purchases… The problem with those schemes is that their success and continuation depends upon continually rising property prices… Confidence is the only thing holding up this giant house of cards.”
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“The worst thing about real estate is the lack of liquidity during downturns. You can’t pick up the phone and sell. You need to find a buyer. In a [major downturn], buyers just go away.”
Three years later, the March 2005 Elliott Wave Financial Forecast observed the wheels turning in the very direction described by Conquer The Crash. In a special section titled “The Real Estate Bust Begins,” Financial Forecast wrote: A reversal in mass social mood from extreme optimism to extreme pessimism is fast approaching. This turnaround will initiate “the next phase of the housing market in which demand wavers, supply spikes higher, sellers holding out for higher prices and selling at lower ones."
The Elliott Wave Financial Forecast also likened the near vertical rise in the S&P 500 Homebuilding Index to the notorious NASDAQ rally from October 1998 to 2000 – suggesting a similar fate was due the former. Since then, homebuilding stocks have plummeted over 60% from year-ago levels.
Fast behind, the July 2005 Elliott Wave Financial Forecast said: "There's no mistaking it now. The extreme psychology has taken up residence in real estate."
Bottom line: It doesn’t take a miracle to stay ahead of the major changes in store for the U.S. housing market. It takes objective analysis of the larger trend in mass social mood. Start now RISK-FREE, plus get a free copy of Conquer The Crash (learn how below).
For an even more in-depth look at housing trends, check out our new online investment course: Learn to Anticipate Real Estate Trends.